TikTok deal in limbo as China goes "not great, not terrible"

But the latest comments from China's commerce ministry suggest that while Beijing is not blocking the TikTok deal in the US, it's far from cheering it on.

The message is clear: China will tolerate the arrangement, as long as it plays by Chinese rules and doesn't turn into a forced breakup dressed up as cooperation.

Acceptance, not approval

About a week after TikTok announced a new US-focused joint venture, China's Ministry of Commerce weighed in publicly. The deal would move TikTok's US operations into a new entity controlled by a group of American and allied investors, while ByteDance, TikTok's Chinese parent, would keep a minority stake.

Commerce ministry spokesperson He Yongqian said Beijing hopes companies involved can reach solutions that comply with Chinese laws and strike a balance between different interests. Analysts say that wording matters. It signals acceptance, not approval, and comes with conditions attached.

Under the deal, ByteDance would license its AI recommendation technology to the new company, TikTok USDS Joint Venture LLC. That technology would be used to retrain a new system, with Oracle responsible for securing it. The structure is meant to answer US concerns about data and national security without fully handing over TikTok's core technology.

China has been careful not to comment too aggressively. Officials have framed the deal as a commercial matter, as long as it stays within legal limits. That approach echoes what happened in 2020, when a TikTok deal involving Oracle and Walmart collapsed after China updated its export control rules to cover recommendation algorithms.

Pleasing both sides

This time, Beijing appears keen to present the outcome as a negotiated compromise, not a forced divestment under US pressure. By tying the agreement to recent talks between Chinese and US leaders, China is also shielding itself from domestic criticism that it let a major tech company be carved up by foreign demands.

At the same time, Beijing's language sends a warning. When officials say they hope the US will provide a fair and non-discriminatory business environment, it's a reminder that restraint has limits. Allowing this deal does not mean accepting future political targeting or shifting rules for Chinese firms operating in the US.

A fragile balance

The ownership split shows how carefully balanced the arrangement is.

American and allied investors will hold 50%, existing ByteDance investors will control just over 30%, and ByteDance itself will keep 19.9%. The new entity is set to launch on January 22, 2026, just one day before the sell-or-ban law was due to kick in.